The labor market impact of immigration in Western Germany in the 1990s

D’Amuri, Francesco; Ottaviano, Gianmarco; Peri, Giovanni

The labor market impact of immigration in Western Germany in the 1990s

Francesco D’Amuri, Gianmarco Ottaviano and Giovanni Peri

Chapter 8 in Firms and Workers in a Globalized World:Larger Markets, Tougher Competition, 2021, pp 223-243 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In this article we estimate the wage and employment effects of recent immigration in Western Germany. Using administrative data for the period 1987–2001 and a labor-market equilibrium model, we find that the substantial immigration of the 1990s had very little adverse effects on native wages and on their employment levels. Instead, it had a sizeable adverse employment effect on previous immigrants as well as a small adverse effect on their wages. These asymmetric results are partly driven by a higher degree of substitution between old and new immigrants in the labor market and in part by the rigidity of wages in less than flexible labor markets. In a simple counter-factual experiment we show that in a world of perfect wage flexibility and no unemployment insurance the wage-bill loss of old immigrants would be much smaller.

Keywords: Allocative Efficiency; Immigration; Inequality; Innovation; International Competition; International Trade; Macroeconomic Effects of Globalization; New Economic Geography; New Trade Theory; Offshoring; Regional Decline; Regional Growth; Territories; Waves of Globalization; Winners and Losers from Globalization; Borders; Creative Destruction; Cultural Diversity; Economic Geography; Economic Growth; Firm Heterogeneity; Firms and Workers; Globalization (search for similar items in EconPapers)
JEL-codes: F02 F6 F61 F62 (search for similar items in EconPapers)
Date: 2021
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